Khumalo Masondo Attorneys Inc. v Hahleketa Trading CC (56465/2016) [2018] ZAGPPHC 400 (4 June 2018)

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

(1) NOT REPORTABLE

(2) NOT OF INTEREST TO OTHER JUDGES

(3) REVISED.

Case number: 56465/2016

4/6/2018

In the matter between:

KHUMALO MASONDO ATTORNEYS INC.

Applicant

and

HAHLEKETA TRADING CC

Respondent

In re :

HAHLEKETA TRADING CC

Plaintiff

KHUMALO MASONDO ATTORNEYS INC.

First Defendant

NQUBELISLO CONSULTING (PTY) LTD

Second Defendant

LEAVE TO APPEAL JUDGMENT

GOODMAN, AJ:

1. On 20 December 2017, I gave a judgment and order dismissing, with costs, an application in which the applicant sought to have an action instituted against it by the respondent declared to be vexatious and an abuse of process, and consequently to have it struck out. The applicant seeks leave to appeal to the Supreme Court of Appeal, alternatively to a full bench of this Court, against that judgment and order.

Condonation

2. The application for leave to appeal was filed out of time, on 1 February 2018. The applicant sought condonation for that delay. It explained that because the judgment was handed down during the December holiday period, its legal representatives were not available timeously to consider the judgment and to prepare the application for leave to appeal, but that they did so as soon as possible on their return to work. The respondent did not oppose condonation. I am satisfied that it is in the interests of justice that the late filing be condoned, given the short length of the delay, the explanation given for it and the fact that no prejudice has been caused by it. I accordingly granted condonation.

The test for leave to appeal

3. Section 17 of the Superior Courts Act 10 of 2013 governs the grant of leave to appeal. It provides that a judge may only give leave to appeal against a final order of this kind, where she is of the opinion that the appeal would have reasonable prospects of success on appeal, or there is some other compelling reason why the appeal should be heard.

4. The applicant relies on the first leg of the test. There was some disagreement between its counsel and counsel for the respondent as to the standard to be applied - namely, whether I had to be persuaded that an appeal could or would have prospects of success. The test is, I think-,I.clearly articulated in the wording of the provision. I should grant leave if I am persuaded that the appeal would have reasonable prospects of success. The applicant need not persuade me that it would win on appeal, but that it could.

Grounds of appeal

5. The grounds of appeal set out in the application for leave to appeal are that:

5.1. The action was wholly ungrounded in law because:

5.1.1. The debt that formed the subject of the action is a debt owed by the partnership constituted in terms of the written partnership

agreement;

5.1.2. The partnership debt could not be claimed by one partner against another until the partnership had been wound up or there is a binding

settlement of accounts;

5.1.3. A reconciliation of the partnership account was a prerequisite to the claim and it was common cause that it had not taken place.

5.2. The action was vexatious, by definition, because it was entirely unmeritorious. .The applicant's complaint was not merely that the

respondent had failed properly to plead its claim, but amounted to "a substantive complaint about the substratum of the action being bad in circumstances where the established law provides for pre-requisites to the institution of such actions".

5.3. Because the claim was bad in law, I ought to have found that the pending action was frivolous and vexatious, and ought to have struck it out.

6. In argument before me, counsel for the applicant confined their argument to two contentions. Mr Suttner SC submitted, first, that the debt being sued for was, on the respondent's own version, owed by the partnership, not by the applicant. Another court may therefore find, according to him, that a claim against the applicant could not succeed because it was unfounded in law. He submitted, further, that another court may find that the respondent's persistence in that unfounded claim was vexatious and would justify the claim being struck out. He did not argue for any other impropriety on the respondent's part.

7. The judgment dealt, in paragraphs 22 to 30, with the test to be applied in determining whether proceedings are vexatious and liable to be struck out. Relying on SCA authority, I found that to qualify as vexatious , the action must be pursued for an improper or ulterior purpose or must, as a certainty, be obviously unsustainable, in the sense that the underlying dispute (and not merely the pleaded case) was wholly without foundation.

8. Mr Suttner sought to persuade me that another court may find that my approach was too conservative, and could find a case vexatious merely on the basis that the claim advanced was legally unfounded and that allowing it to proceed would expose a party to "the tyranny of litigation".

9. Striking an action out as a vexatious precludes it from continuing and thus limits a litigant's right of access to court. That is why an applicant who seeks to declare proceedings vexatious is held to a stringent standard. The cases cited in the judgment consistently find as much.

10. The ordinary process for impugning a claim as legally unsustainable is by way of exception. If an exception to the particulars of claim is upheld, even on the basis that it failed to disclose a cause of action, the "invariable practice"[1] of the court is to afford the plaintiff an opportunity to amend. The Supreme Court of Appeal has found that it is inappropriate to put a party to the "drastic consequence" of having to start de novo merely because its particulars of claim did not disclose a sustainable cause of action.[2]

11. Mr Suttner accepted that the current complaint could have been pursued by way of exception. (It wasn't, even though an exception was in fact taken to the particulars of claim.) He submitted that the applicant was nevertheless entitled to apply to have it struck out as vexatious, as an alternative to pursuing an exception. He admitted that there was no precedent for permitting a declaration of vexatiousness to be pursued as an alternative to an exception where a claim is alleged merely to be legally unfounded. From the Bar, he suggested that the common law could be developed to permit a claim being struck out as vexatious where it advances a legally unsustainable claim.

12. A case for the development of the common law was not pleaded in the main application or in the application for leave to appeal and, as a result, no relevant circumstances were put up motivating in its favour.[3] Nor can I conceive of any. Allowing a claim to be .struck out as vexatious merely because it is legally unsustainable would permit the defendant to an action effectively to bypass the safeguards built into the exception process. It would also undermine the high

threshold that the SCA has set before a finding of vexatiousness can be made. I do not think there is a reasonable prospect of another court developing the law in the manner proposed.

13. As set out above, the applicant confined its grounds of appeal to a contention that the respondent's claim was unsustainable in law and that the mere persistence in that claim was vexatious. It did not argue for any additional impropriety on the respondent's part. It follows that even if the applicant could persuade an appeal court that the claim made against it is bad in law (contrary to my findings), that court would still not, in my view, strike it out as vexatious. It is consequently unnecessary for me to consider the applicant's second contention that the action is unfounded because the respondent has sued the wrong party.

14. In the circumstances, I am not persuaded that the proposed appeal has reasonable prospects of success.

15. In the result, I make the following order:

(a) The application for leave to appeal is dismissed, with costs.

I A GOODMAN, AJ

ACTING JUDGE OF THE HIGH COURT

OF SOUTH AFRICA

GAUTENG DIVISION

JOHANNESBURG

Counsel for the applicant: Mr Suttner SC

Mr Pullinger

Counsel for the respondent: Mr Strydom SC

Date of hearing:

31 May 2018

Date of Judgment:

4 June 2018

[1] Group Five Building Ltd v Government of the Republic of South Africa (Minister of Public Works and Land Affairs) [1993] ZASCA 4; 1993 (2) SA 593 (A) at 602C-6041; Lancino Financial Investments (Pty) Ltd and another v Bennet and another (2008] 4 All SA 220 (SCA) para 5.

[2] Group Five at 602C-603D.

[3] The Constitutional Court has confirmed that the common law should generally only be developed where it is deficient, and should not be developed "in a factual vacuum". See Member of the Executive Council for Health and Social Development, Gauteng v DZ obo WZ (Member of the Executive Council for Health, Eastern Cape and another as amici curiae) 2017 (12) BCLR 1528 (CC) paras 27-33.